Oval cells (hepatic stem cell progeny) originate from stem cells which reside within the terminal bile ductules located at the interface between the parenchyma and the bile tree and have the potential to differentiate into hepatocytes and biliary epithelial cells (BEC). In response to severe hepatocyte injury, oval cells form a system of proliferating branching ducts that move inside the parenchyma where they finally differentiate towards hepatocytic lineage. Multiple molecular factors and cell types contribute to the process of adult stem cell activation. We and others have established that oval cell infiltration of hepatic tissue occurs in a close conjunction with accompanying stellate cells which provide HGF, and also promote pericellular collagen deposition, thus creating a microenvironment supporting growth of expanding ductular cells. The goal of our study was to establish the role for c-Met in different phases of stem cell activation by utilizing mice harboring c-met floxed alleles (Ctrl) and Alb-Cre or Mx1-Cre transgenes. To activate oval cells, we used a model of chronic liver injury induced by diet containing the porphyrinogenic agent 3, 5-diethocarbonyl-1,4-dihydrocollidine (DDC), which was introduced into the field by our previous work. Inactivation of c-Met was achieved in both epithelial cell types (AlbCreMet model) and in all liver cells (MxCreMet model) allowing us to address the significance of the cross-talk between epithelial and nonparenchymal cell compartments. The phenotype of MxcreMet mice was very similar albeit more severe than that of AlbcreMet mice as determined by biochemical and morphological data. In the absence of c-Met signaling, both hepatocyte- and stem cell-mediated liver regeneration were severely impaired. There was no compensatory increase in liver mass due to the decrease in hepatocyte proliferation and increase in apoptotic death. At the molecular level, Met mutant mice were unable to activate the major downstream signaling pathways involved in cell proliferation, motility regulation and apoptosis protection, such as Erk1/2, Stat3, and Akt. The c-Met deficient livers displayed a classical bile duct proliferation restricted by a more severe periportal fibrosis reflecting a failure of oval cell outgrowth and/or redirection of their differentiation towards BEC lineage. Analysis of the frequency and tissue distribution using cell specific antibodies against BEC and oval cells (A6 and EpCam) revealed a striking decrease in the number of A6+/EpCam+ cells and confirmed almost complete lack of their migration inside the parenchyma. More significantly, we found a marked reduction in the number of A6+/EpCam-/HNF4+ cells, consistent with a reduced ability to differentiate into hepatocytes in the absence of c-Met signaling. This was accompanied by a progressive decline in the rate of ductular proliferation in c-Met deficient livers as estimated by Ki67 immunohistochemistry. Furthermore, experiments in culture showed that single cell suspensions of EpCam+/Lineage- cells isolated from c-Met KO mice consistently displayed a reduced frequency of spheroid-forming cells when seeded in BD MatrigelTm enriched with basement membrane matrix proteins and growth factors, suggesting that self-renewal of hepatic stem cells is affected by c-Met loss. Consistent with the important role of HGF/c-Met in protection against fibrosis, both models of c-Met conditional knockout mice developed a more extensive periportal fibrosis as compared to Ctrl mice despite the comparable protein levels of the known fibrogenic factors, such &amp;#945;SMA, TGF&amp;#946;1, and TIMP-1. Nevertheless, the tissue distribution of collagen-producing stellate cells was dramatically different, with the majority being located strictly within the areas of periportal fibrosis. This was paralleled by defective recruitment of the tissue-infiltrating monocytes/macrophages and reduced MMP9 activity. Gelatin zymography of FACS-sorted F4/80+ Kupffer cells identified macrophages as the main cell type producing MMP-9. In Ctrl livers, a combination of A6 confocal microscopy either with in situ zymography or co-staining with F4/80 demonstrated increased MMP-9 activity along the routes of expanding oval cells, implying that fibrolytic activity of MMP-9 is contributing to migration of oval cells. Since these phenomena occurred regardless of the genotype of nonparenchymal liver cells, these data argue for a key functional role of the epithelial component in creating a microenvironment which may affect fate determination and terminal differentiation of hepatic precursor cells. c-Met gene ablation led to pleiotropic phenotypes due to c-Met involvement in the control of multiple cellular functions. Our study provides morphological and biochemical evidence that in the absence of c-Met signaling, considerable damage occurred in both epithelial compartments. After DDC treatment, AlbCreMet and MxCreMet mice exhibited impaired bile secretion with significant functional and molecular alterations as judged by hepatic expression of the major genes involved in bile acid production, metabolism and transport. In addition, we found defects in actin cytoskeleton organization and relocation of Bgp1 into the submembranous compartment which may affect sorting and maintenance of transporters in the canalicular membrane. The combined mechanisms of the excretory disfunction in c-Met deficient hepatocytes could contribute to an increased bile acid production and a defective hepatobiliary transport capacity thereby rendering c-Met mice more susceptible to toxic injury. The role of c-Met in cellular and molecular physiology of bile secretion and cholesterol homeostasis warrants further study. An understanding of the mechanisms involved in hepatobiliary transport systems has major applications in treating liver diseases such as cholestasis. In summary, our studies show that expression of c-Met is a major determinant of adult hepatic stem cell biology. Lack of c-Met affected (i) stem cell renewal, (ii) proliferation potential, (iii) capacity to migrate, (iv) pattern of differentiation, and (v) dynamic interaction with microenvironment. The latter may provide an explanation for the failure of stem cell mediated liver regeneration in cirrhotic livers and have important implications for fibrotic liver disease. Our previous work has established that HGF plays a pivotal role in regulating the onset of S phase and DNA replication following partial hepatectomy (PH). We used c-Met conditional knockout mice (AlbCreMet), in which the c-met gene is inactivated in postnatal hepatocytes by Alb-Cre recombinase to directly address the net biological outcome of c-Met on liver regeneration. Thecurrent work has begun to elucidate the molecular mechanisms behind c-Met signaling in regulation of G2/M progression during liver regeneration and highlights several novel and important issues: (i) c-Met signaling makes a unique contribution to hepatocyte proliferation by sustaining a long-term Erk1/2 phosphorylation which is not compensated either by other tyrosine kinases (e.g. EGFR) or other cytokines related to liver regeneration;(ii) c-Met through hyperactivation of the MAPK/Erk1/2 cascade regulates the mitotic checkpoints via stimulation of cdc2, Plk1, and Aurora B kinase; and (iii) the G2/M block caused by the lack of c-Met signaling in hepatocytes is associated with anomalous dynamics of chromosome condensation and related defects in chromatin-induced microtubule stabilization and spi [summary truncated at 7800 characters]